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(Re: ‘Russia demands changes to Ukraine-EU trade deal’ in the Sept. 19 edition of the Examiner)
This article tells only a tiny part of the story. Even after Ukrainian exports to Russia have been cut in half during 2014, about 20% of Ukrainian merchandise still goes to Russia and 30% of Ukraine’s imports come from Russia.
This trade is vital to Ukraine’s economy, but not nearly so important to Russia, where Ukraine makes up slightly less than 5% of foreign trade.
Ukraine has had a free trade agreement with Russia and eight other Commonwealth of Independent States (CIS) for some years now. Over the years, it has signed more than 400 economic, including transport, agreements with the CIS countries.
The problem with the European Union deal for Russia and its economic partners is that cheap European goods will flow into Ukraine and Ukrainian entrepreneurs will then flood the Russian market with those very same goods.
Russia, Belarus, Kazakhstan, etc. will have no choice but to close their borders to cheap EU goods coming in via Ukraine, or their own industries and Eurasian trade will suffer.
This is not some sort of Putinist aggressive demand; rather it is inevitable protectionist economics of the type practised by almost every other country – like Canada.
Incidentally, Ukraine is going to have a very difficult time selling its more expensively produced goods in Europe, so for awhile, maybe for a long time, the EU-Ukraine trade will be very much one-way, and Kyiv will need to have markets elsewhere.
The fact that Ukraine still gets most of its gas, for which it owes billions, and fuel for its four nuclear energy plants from Russia is yet another very important matter. So too is the fact that four of Ukraine’s 11 largest banks are Russian owned.
Moreover, one might ask why, when most Western countries have imposed economic and financial sanctions against Russia, Ukraine has not.
Perhaps Kyiv realizes that it can’t have it both ways.
Larry Black
Barrie